Ford Credit’s Extended Term, Leasing Remain Below Industry Average

Ford Credit Motor Co. is offering terms of 73 months or higher to only consumers with “very, very high Fico scores,” Robert Shanks, Ford Motor Co.’s chief financial officer said during the company’s earnings call Thursday. Average loan term for the captive was 64 months, according to 1Q earnings.

The industry overall has been extending loan terms at a higher rate than Ford Credit, and for consumers across the credit spectrum, Shanks said.

“We are not participating in that. We actually are offering in very small volume even 84 months,” he said. “That’s something that is out there as well, but again, I think you’ll see us trending well below the industry as that trend continues.”

The parent company and captive also “work together under a One Ford Lease Strategy” as the leasing industry continues to grow. However Ford’s lease share remains below the industry, according to the company’s earnings release. Lease share of retail sales were at 26% in 1Q, versus the industry average of 32%.

“We have been seeing increasing lease rates over the last number of years. And you can see in the first quarter, it was 32%. We have traditionally not been at the same level as the industry, which was the case,” Shanks said. “In the first quarter, we came in at 26%. Our expectations are that for the full year we will come in at a level that will be below that.”

Although Ford’s full-year lease penetration is expected to decrease, the company remains “very comfortable” at that current level of leasing, he said.

Ford Credit also reported slightly lower retail contract volume year over year, with 302,000 contracts in the first quarter, versus 323,000 contracts at the same time a year ago. Delinquencies were at 0.14% for 1Q16, while repossessions were at 1.04%.